Agenda of Policy Review Committee Meeting

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11 February 2025

Dear Councillor,

In pursuance of the provisions of the Local Government Act, 1993 and the Regulations thereunder, notice is hereby given that a POLICY REVIEW COMMITTEE MEETING of Penrith City Council is to be held remotely using audio visual links, audio streamed and in the Passadena Room, Civic Centre, 601 High Street, Penrith on Monday 17 February 2025 at 7:00 PM.

Attention is directed to the statement accompanying this notice of the business proposed to be transacted at the meeting.

Yours faithfully

Andrew Moore

General Manager

BUSINESS

1. LEAVE OF ABSENCE

2. APOLOGIES

3. CONFIRMATION OF MINUTES

Policy Review Committee Meeting - 2 December 2024.

4. DECLARATIONS OF INTEREST

Pecuniary Interest (The Act requires Councillors who declare a pecuniary interest in an item to leave the meeting during discussion of that item)

Non-Pecuniary Conflict of Interest – Significant and Less than Significant (The Code of Conduct requires Councillors who declare a significant non-pecuniary conflict of interest in an item to leave the meeting during discussion of that item)

5. ADDRESSING THE MEETING

6. MAYORAL MINUTES

7. NOTICES OF MOTION TO RESCIND A RESOLUTION

8. NOTICES OF MOTION

9. DELIVERY PROGRAM REPORTS

10. URGENT BUSINESS

11. CONFIDENTIAL BUSINESS

2025 MEETING CALENDAR

January 2025 - December 2025

(proposed to be adopted by Council – 11 November 2024)

TIME

JAN

FEB

MAR

APRIL

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

DEC

Mon

Ordinary Council Meeting

7:00pm

10@

28 -

26 #

23*

25@

22^

27ü

17∞#+

Policy Review Committee

7:00pm

-	Meeting at which the draft corporate planning documents (Delivery Program and Operational Plan) are endorsed for exhibition
*	Meeting at which the draft corporate planning documents (Delivery Program and Operational Plan) are adopted
#	Meetings at which the Operational Plan quarterly reviews (March and September) are presented
@	Meetings at which the Delivery Program progress reports (including the Operational Plan quarterly reviews for December and June) are presented
^	Election of Mayor and/or Deputy Mayor
ü	Meeting at which the 2024-25 Annual Statements are presented
∞	Meeting at which any comments on the 2024-25 Annual Statements are adopted
+	Meeting at which the Annual Report is presented

- Extraordinary Meetings are held as required.

- Members of the public are invited to observe meetings of the Council (Ordinary and Policy Review Committee, Councillor Briefings are confidential sessions).

Should you wish to address Council, please contact the Head of Governance, Adam Beggs on 4732 7597.

UNCONFIRMED MINUTES

OF THE POLICY REVIEW COMMITTEE MEETING OF PENRITH CITY COUNCIL HELD REMOTELY USING AUDIO VISUAL LINKS, AUDIO STREAMED ON THE COUNCIL WEBSITE AND IN THE PASSADENA ROOM, PENRITH

ON MONDAY 2 DECEMBER 2024 AT 7:00PM

WEBCASTING STATEMENT

His Worship the Mayor, Councillor Todd Carney read a statement advising that Council Meetings are recorded and webcast.

PRESENT – IN PERSON

His Worship the Mayor, Councillor Todd Carney, Deputy Mayor, Councillor Ross Fowler OAM and Councillors Libby Austin, Kirstie Boerst, Robin Cook, Sue Day, Glenn Gardiner, Sabbie Kaur, Hollie McLean, Edwin Mifsud, Reece Nuttall, Vanessa Pollak, Faithe Skinner, Garion Thain and John Thain.

APOLOGIES

There were no apologies.

CONFIRMATION OF MINUTES - Policy Review Committee Meeting - 12 February 2024

PRC4 RESOLVED on the MOTION of Councillor John Thain seconded Councillor Robin Cook that the minutes of the Policy Review Committee Meeting of 12 February 2024 be confirmed.

DECLARATIONS OF INTEREST

Councillor Ross Fowler OAM declared a Pecuniary Conflict of Interest in Item 1 - Penrith CBD Corporation - 2023-24 Annual Report and Audited Financial Statement, as he is the auditor for Penrith CBD Corporation. Councillor Ross Fowler OAM stated that he would leave the meeting during consideration of this item and would not take part in voting or discussion on this item.

Councillor Reece Nuttall declared a Non-Pecuniary Conflict of Interest – Less than Significant Item 1 - Penrith CBD Corporation - 2023-24 Annual Report and Audited Financial Statement, as he is on the Penrith CBD Centre Board as Council’s Representative.

Councillor Garion Thain declared a Non-Pecuniary Conflict of Interest – Less than Significant in Item 2 St Marys Town Centre Corporation - 2023-24 Annual Report and Audited Financial Statement, as he is on the St Marys Town Centre Board as Council’s Representative.

Having previously declared a Pecuniary Conflict of Interest in Item 1, Councillor Ross Fowler OAM left the meeting, the time being 7:02pm.

DELIVERY PROGRAM REPORTS

Outcome 2 - We are welcoming, healthy, happy and connected

1 Penrith CBD Corporation - 2023-24 Annual Report and Audited Financial Statement

PRC5 RESOLVED on the MOTION of Councillor Glenn Gardiner seconded Councillor Faithe Skinner that the information contained in the report on Penrith CBD Corporation - 2023-24 Annual Report and Audited Financial Statement be received.

Councillor Ross Fowler OAM returned to the meeting, the time being 7:15pm.

2 St Marys Town Centre Corporation - 2023-24 Annual Report and Audited Financial Statement

PRC6 RESOLVED on the MOTION of Councillor Sabbie Kaur seconded Councillor Reece Nuttall that the information contained in the report on St Marys Town Centre Corporation - 2023-24 Annual Report and Audited Financial Statement be received.

URGENT BUSINESS

There was no Urgent Business.

There being no further business the Chairperson declared the meeting closed the time being 7:39pm.

Policy Review Committee Meeting 17 February 2025

PP&VA Annual Report 2023-24 and Update

Compiled by: Tiffany LeeShoy, Senior Cultural Strategy Officer

Patricia Gonzalez, Social Strategy Program Manager

Authorised by: Marcella Kelshaw, Head of City Activation, Community and Place

Sandy Davies, Director Community Connection

Outcome	We are welcoming, healthy, happy, creative and connected
Strategy	Support and provide opportunities to participate in activities and events that celebrate our diversity, culture and creativity
Principal Activity	Support and implement initiatives which contribute to culture and creativity across our City

Executive Summary

This report provides an overview of the activities and performance of Penrith Performing and Visual Arts Ltd (PP&VA) for the period 2023-24, as presented in the 18th Annual General Meeting (AGM) papers. Key documents include the Annual Report with audited financial statements and key performance indicators (Attachment 1).

The 2023-24 period has been marked by significant challenges leading to a company review and restructure. Its notable achievements are testimony to the commitment, resilience and dedication of the PP&VA team.

The PP&VA Chief Executive Officer (CEO) Ms Krissie Scudds and Chairperson Mr Adam Porter will present on the activities and highlights of the Annual Report for Financial Year 2023-24 and Audited Financial Statements at this meeting.

This report recommends that Council receive the information on the PP&VA Annual Report and Audited Financial Statements for 2023-24, and that Council agree to underwrite the operations of Penrith Performing and Visual Arts Ltd up to the presentation of their 2026-27 Annual Report.

Background

The PP&VA brings together performing and visual arts through the management and operation of Council-owned assets, Joan Sutherland Performing Arts Centre (The Joan), Penrith Regional Gallery and the Lewers’ Bequest Art Collection. The Joan further supports the development, production and presentation of local performing arts and music through Q Theatre and Penrith Conservatorium of Music.

Established to foster and promote the cultural landscape of Penrith, PP&VA plays a crucial role in enriching the community through diverse artistic expressions and educational programs. The organisation’s mission is to provide accessible and inclusive cultural experiences that enhance the quality of life for residents and visitors alike.

The PP&VA is an entity of Penrith City Council and a company limited by guarantee. The objectives and operations of the PP&VA are managed by a Board of Directors in accordance with the constitution of the PP&VA. The PP&VA Board appoints a Chief Executive Officer to manage day to day operations.

The Board of the PP&VA consists of 10 Directors in total, 4 Directors that represent Council including the General Manager or their nominee. The 6 remaining Directors are community members. To provide continuity on the Board, at the AGM, half the Community Directors are appointed for two (2) years and half for four (4).

The current Board membership includes Mr Adam Porter (Chair), Ms Dale Maxwell-Smith (Deputy Chair), Mr Don Church (Secretary), Councillor Kirstie Boerst, Councillor Robin Cook, Councillor Ross Fowler OAM, Mr. Andrew Jackson (PCC General Manager’s Representative), Ms Melissa Matheson, Ms. Alison McLaren and Ms Amanda Rudolf.

Current Situation

When the PP&VA 2023-24 Annual funding application to Create NSW was recommended for support, but not funded (labelled ‘unfunded excellence’) the company faced an uncertain future. To better understand their situation, PP&VA engaged a financial strategist to look at their revenue and expenditure patterns and financial practices over the past four years. The strategist revealed an underlying structural deficit which was the result of COVID-era budget arrangements.

PP&VA is not alone in this challenge. The arts sector has not bounced back well from the disruption of COVID, funding opportunities remain constrained, and audience behaviour is changed. Several arts organisations have closed or entered administration.

With the Council’s support, PP&VA have now implemented a more disciplined approach to budgeting, forecasting and resource allocation, with a shift towards revenue generation and elimination of risk. The company also restructured between December 2023 and June 2024, which saw a significant change in personnel, including the Executive Leadership Team.

Artistic Highlights

Whilst striving for financial sustainability, as a leading Western Sydney cultural facility, it has been vital that PP&VA maintains artistic credibility and offers a quality, cohesive program. In this period, PP&VA received funding and delivered Creative Penrith by Night, which activated The Joan and the Gallery in the evenings with music, hands-on artmaking and an interactive digital theatre experience. The Gallery also secured Annual Program Funding for 2024 and 2025, receiving praise from Create NSW that it had topped the round ranking with an excellent program.

Further successful visual arts grants included a Museums & Galleries NSW Audience Development grant, placing artist tutors into Nepean Creative and Performing Arts High School for after-hours artmaking with students; and a Magnetic Places grant for Stories from Queen Street, a short video documentary highlighting the role of small businesses in St Marys.

PP&VA leveraged its resources by deepening its collaborative relationships. The NSW Department of Education collaboration saw the Gallery host a two-day art camp for 39 students in years five and six in the final week of term 3 2023, and the presentation of Art Express, which represented the only exhibition outcome for the Department in Western Sydney. It featured the work of over 30 student artists, including 12 from Western Sydney and 8 from the Penrith and Blue Mountains region. Over its three-month exhibition period it received over 35,000 visitors, including 16 primary and secondary school excursions.

The partnership between Western Sydney University and Penrith Conservatorium continued into its fifth year, with five tutors delivering lessons in voice, acoustic and bass guitar, piano and drums.

Students featured alongside some of the country’s finest musicians including Omega Ensemble and the Australian Chamber Orchestra. This type of music programming saw a growth in ticket sales as well as audience engagement, particularly with the highly successful Worlds Collide program in June 2024.

The university partnership was further expanded to include an agreement with Western Sydney Creative under which PP&VA delivered a Women in the Arts Leadership Forum at the Whitlam Institute in March 2024. The event, which opened with a speech from Susan Templeman MP, Special Envoy for the Arts, booked out well ahead of time, and was successfully delivered with excellent audience feedback through surveys. This partnership will be continued for a second event in 2025.

A home-grown success was Q Theatre’s presentation of The Village. This work began its development pre-COVID with playwright Tasnim Hossain in residence at Council’s Village Café, talking with local residents and building a play informed by their stories and the migrant experience. The event sold out and audience feedback was resoundingly positive, with a special matinee showing to Village Café participants, many of whom were attending a theatre performance for the first time.

Key Performance Indicators

PP&VA’s KPIs are developed by the PP&VA Board when they adopt a new strategic plan. This is the last year of reporting against the KPIs that were set with the 2020-23 PP&VA Strategic Plan.

In 2023-24, PP&VA met or exceeded all 19 KPIs. Of note, 348,880 people attended a PP&VA event, exhibition or activity which is more than double the KPI (130,000), and an increase of more than 50% on last year’s attendance. Online engagement has also continued to be strong on both the website and social media interaction.

Artistically, PP&VA supported 22 new works (triple the KPI target) and commissioned 11 works. There were 117 new hirers of the cultural facilities which exceeds the target of a 10% increase year on year.

The full list of key performance indicators is attached.

Chief Financial Officer Comments

The Financial Statements of PP&VA have been independently audited by Kelly Partners and Bieger Piepers for the 2023-24 financial year ending 30 June 2024 (refer Attachment A).

PP&VA reported a net surplus for the 2023-24 Financial Year of $14,998 in their Financial Statements. This is an increase of $548,799 from their reported 2022-23 deficit of $533,800. Please note, the 2022-23 deficit has been amended in 2023-24 to include $32,400 in change in fair value of artwork income in other comprehensive income.

PP&VA Operating Income increased by 33% from $4,516,697 to $6,004,790. This is driven by grant revenue increasing by 42% from $2,839,632 in 2023 to $4,021,833 in 2024 including Penrith City Council’s restructuring support and an additional capital upgrade grant from Create NSW. Other Revenue has increased 18% reflecting a 19% increase in venue hire income and 300% increase in sponsorship and philanthropy. Total Expenses increased by 19% from $5,050,497 to $5,989,792. This is predominantly driven by Employee Benefits increasing by 16% from $3,786,120 in 2023 to $4,377,122 in 2024 due to the cost of the staff restructure and increased level of service delivery through increased venue hiring and tuition and workshop activity.

The Council subsidy for 2023-24 was $3,186,900. This includes a one-off $791,000 in restructuring support. This is also exclusive of indirect subsidies by Council such as costs incurred from IT support, Finance support, Workforce support, Legal support and maintenance of building and premises. The Statement of Cash Flows shows that PP&VA has a cash at bank balance of $1,895,671 as at 30 June 2024. A decrease of $599,775 from $2,495,446 as at 30 June 2023.

It is acknowledged that PPVA has taken significant steps to improve their financial sustainability model after a challenging year reshaping their organisation.

It is noted that in the Council report on 4 December 2023, Council resolved to underwrite the year of 2024-25. This report recommends that Council continue to underwrite the operations of the PP&VA up to the presentation of their 2026-27 Annual Report.

Conclusion

Penrith Performing and Visual Arts Ltd (PP&VA) has submitted its Annual Report and audited financial statements for the year ending 30 June 2024. This report has provided an overview and commentary on the documents as presented in the 18th Annual General Meeting (AGM) papers.

2023-24 was a year of challenges and changes for PP&VA. A new approach to financial management and a company restructure, without sacrificing artistic credibility, will ensure it remains steadfast into the future.

RECOMMENDATION

That:

1. The information contained in the report on PP&VA Annual Report 2023-24 and Update be received.

2. Council continues to underwrite the operations of Penrith Performing and Visual Arts Ltd up to the presentation of their 2026-27 Annual Report.

ATTACHMENTS/APPENDICES

1. ⇩

PP&VA Annual Report, KPIs & Audited Financial Statement

57 Pages

Attachments Included

Policy Review Committee Meeting 17 February 2025

ARIC Annual Report and Strategic Workplan

Compiled by: Vinay Apte, Risk and Audit Officer

Authorised by: Matthew Bullivant, Director Corporate Services

Anthony Robinson, Corporate Assurance Lead

Outcome	We have open and collaborative leadership
Strategy	Corporate Enablers
Principal Activity	Undertake the audit program as agreed with the Audit Risk and Improvement Committee (ARIC) to ensure Council’s operations are ethical and efficient

Executive Summary

The Audit, Risk and Improvement Committee (ARIC) Terms of Reference, last adopted by Council on 10 February 2025, states the ARIC will provide an annual assessment to the governing body and the General Manager on the committee’s work and its opinion on how Council is performing.

This report recommends that the attached ARIC Annual Report be received by the Policy Review Committee.

As has been the practice in recent years, the Chairperson of the ARIC, Ms Elizabeth Gavey, will present the ARIC Annual Report to the Policy Review Committee (PRC).

In addition, Ms Gavey will provide the PRC with an overview of the ARIC Strategic Workplan 2024 – 2028, also attached.

Background

The ARIC Annual Report documents the operation and activities of the ARIC and an overview of the Internal Audit function for Penrith City Council for the period from January 2024 to December 2024.

The Chairperson, Ms Elizabeth Gavey, presented the draft ARIC Annual Report at the ARIC meeting on 11 December 2024. The annual report was endorsed subject to minor changes.

The ARIC Strategic Workplan has been developed to ensure the committee meets its legislative obligations under section 428A of the Local Government Act 1993. The strategic and annual workplans are subject to change and can be amended as required to respond to emerging areas of concern to the Committee. The meeting planner (section 7 of the attached report) sets out a rolling program for the committee for the following four years.

Ms Gavey presented the draft ARIC Strategic Workplan at the ARIC meeting on 12 June 2024. The workplan was endorsed subject to minor changes.

Current Situation

The ARIC Annual Report for the period January 2024 to December 2024 and the ARIC Strategic Workplan 2024 – 2028 are attached for the PRC’s consideration. The ARIC Chair, Ms Elizabeth Gavey, will attend to present the documents to the PRC, and answer any questions. Brief summaries of the documents are provided below.

Overview of the Year

During 2024, the ARIC performed its functions and responsibilities, as outlined in the ARIC Terms of Reference. This was facilitated by the adoption of a forward responsibility calendar, which reflects the requirements of the Terms of Reference and Legislation, allocating the varying responsibilities to nominated meetings across a 12-month period to ensure complete coverage (refer attachment 2).

Key events in 2024 were the Office of Local Government’s Guidelines for Risk Management and Internal Audit and associated amendments to the Local Government (General) Regulation 2021 coming into force. The ARIC reviewed and endorsed its ARIC Terms of Reference and the Internal Audit Charter to ensure alignment with the Guidelines.

Council has continued to develop its management of strategic and operational risks, financial and other internal controls and compliance obligations. Areas on which to focus and dedicate resources have been prioritised by Council using a risk-based approach.

The ARIC believes that Council is adequately supporting its internal and external audit functions and meets its external accountability requirements.

The ARIC’s overall assessment is that the arrangements in the areas of responsibility specified in the ARIC Terms of Reference were operating adequately during 2024. Overall, during 2024, the Committee continued to be a well-balanced team that has operated in a collaborative and constructive manner.

ARIC Strategic Workplan 2024 – 2028

The document (which is attached) expands on the areas of oversight required for the ARIC to discharge its legislative responsibilities and align with its Terms of Reference. It distils this information into a forward meeting planner, setting out the meeting agendas for each quarter, comprising both standing and special agenda items.

The ARIC Terms of Reference state the following regarding the Workplan:

The work of the committee is to be thoroughly planned and executed. The committee must develop a strategic work plan every four years to ensure that the matters listed in Schedule 1 are reviewed by the committee and considered by the internal audit function when developing their risk-based program of internal audits. The strategic work plan must be reviewed at least annually to ensure it remains appropriate.

The committee may, in consultation with the governing body, vary the strategic work plan at any time to address new or emerging risks. The governing body may also, by resolution, request the committee to approve a variation to the strategic work plan. Any decision to vary the strategic work plan must be made by the committee.

Schedule 1 of the Terms of Reference expands on the following areas of council operations which, per section 428A of the Local Government Act 1993, the committee is to review and provide independent advice to the council:

· compliance

· risk management

· fraud control

· financial management

· governance

· implementation of the strategic plan, delivery program and strategies

· service reviews

· collection of performance measurement data by the council, and

· internal audit.

These areas are integrated into the ARIC Strategic Workplan, as evident in Section 8. The meeting planner, providing information on agenda items, is in Section 7.

Conclusion

The Audit, Risk & Improvement Committee (ARIC) is a legislated advisory committee of Council which provides independent oversight and advice to Council in relation to matters on governance, risk management, compliance, financial management, business improvement and audit related operations. As is the custom, the ARIC Chairperson, Ms Elizabeth Gavey, will present the committee’s Annual Report (2024) to the PRC. In addition, Ms Gavey will present the ARIC Strategic Workplan 2024 – 2028, which was developed in 2024 in response to new regulations (Division 6A, Auditing and Audit, Risk and Improvement Committees, Local Government (General) Regulation 2021) and associated Office of Local Government guidelines.

RECOMMENDATION

That the information contained in the report on ARIC Annual Report and Strategic Workplan be received.

ATTACHMENTS/APPENDICES

1. ⇩	ARIC Annual Report 2024	14 Pages	Attachments Included
2. ⇩	ARIC Strategic Workplan 2024 - 2028	16 Pages	Attachments Included

Policy Review Committee Meeting 17 February 2025

Annual Review of Council's Investment Policy and Strategy

Compiled by: James Legarse, Treasury and Operations Accountant

Authorised by: Neil Farquharson, Chief Financial Officer

Matthew Bullivant, Director Corporate Services

Outcome	We have open and collaborative leadership
Strategy	Deliver an efficient, transparent and accountable service to the community
Principal Activity	Support financial sustainability through financial planning and budget management and provide accurate reporting to the community

Executive Summary

Council’s Investment Policy (the Policy) and Strategy are currently reviewed on an annual basis and Council Officers have completed the review over recent months. It is a prudent and appropriate financial management practice that the Policy be regularly reviewed to consider the latest economic environment and investment strategies.

The Council’s Investment Policy and Strategy was presented to Council’s Audit, Risk and Improvement Committee (ARIC) meeting held on 11 December 2024 and noted, with further information provided to ARIC in January around our strategy as requested during that meeting.

The Investment Policy sets out the framework for investment decision-making, ensuring compliance with relevant legislations, ministerial order and managing risks. The Investment Strategy is a tactical document that outlines how the policy's principles and objectives will be achieved in practice.

The proposed changes to the Investment Policy and Strategy are not considered material, and consist of the following:

Policy

· Under 4.3 and 4.4, update the position titles to Chief Financial Officer and Operational Finance Manager.

· Under 5.6, inclusion of the ‘Enhanced BBSW rate’ as part of the Council’s rate of return benchmarks.

· Under 6.1, under Liquidity Framework, update on investment portfolio amount for illustration purposes and the minimum threshold for ‘1 month (incl. Call Account & General Fund)’.

· Extend the policy review period, through ARIC and PRC, to four-year interval unless required earlier due to a change in legislation or significant event.

Strategy

· Update information under ‘Investment Environment’.

· Removal of COVID-19 related components and/or commentaries.

· Commence investing with TCorp’s medium/long-term growth funds.

Other changes that are proposed are cosmetic in nature or are an update of the current amounts/rates/results, referenced and relevant to this financial year. These amendments do not constitute a change in Policy or Strategy.

This report recommends that Council adopt the proposed changes to the Investment Policy and Strategy as outlined in this report.

Background

In May 2010, the Department of Premier and Cabinet, Division of Local Government released their Investment Policy Guidelines to assist councils in their preparation of an Investment Policy for the prudent and appropriate management of councils’ funds. This was in response to concerns some funds were not invested in councils’ names, and the loss of capital from some councils investing in structured products. The Ministerial Investment Order dated 11 February 2011 removed the ability for councils to invest in mortgages of land, deposits with Local Government Financial Services and added key considerations. The Guidelines were a response to the Global Financial Crisis which was triggered by Collateral Debt Obligations (or mortgage backed securities).

On 10 October 2017, the Office of Local Government (OLG) released Circular Number 17-29 - Interim TCorp Waiver which allows councils to seek investment advice from TCorp (wholly owned financial services company of the State Government)as part of their financial and strategic planning processes. Section 5 of the Guidelines requires councils to seek advice from advisors licenced by the Australian Securities and Investments Commission, to receive written confirmation that no actual or potential conflicts of interest exist, and to undertake separate reference checks of advisors.

Council’s Investment Policy and Strategy were last amended and reported to Council at its Policy Review Committee meeting, held 4 December 2023. The amendments are cosmetic in nature and did not constitute a change in Policy or Strategy.

The proposed changes to the 2024-25 Investment Policy and Strategy continue to support and endorse the Council’s risk profile of a ‘conservative’ approach in investment decision making and align with the Ministerial Directions referred to above.

Variations to existing Investment Policy

I. 4.3 Delegation of Authority and 4.4 Responsibility for Implementing and Reviewing this policy and Reporting of Investments: Updated the position titles of ‘Financial Services Manager’ and ‘Operational Finance Coordinator’, to ‘Chief Financial Officer’ and ‘Operational Finance Manager’, respectively. This is in conjunction with the organisational restructure that took effect from 1 July 2024.

II. 5.6 Benchmark of Investment Returns: Include the ‘Enhanced BBSW rate’ as part of the Council’s rate of return benchmarks. This target is not new to Council as it is already incorporated in the Investment Strategy since the 2020-21 edition and has been a common practice adopted by the Finance team since.

The Council’s enhanced benchmark rate will seek to only accept investment deals that exceed the 90 day BBSW rate, at least by 30 additional basis points. The 30-basis points increase is predicated on the Council’s monthly average rate of return result over the monthly average bank bill swap rate (BBSW), as at October 2024; as well as on the future economic outlook – where contraction on investment spreads is highly probable as RBA’s cash rate is expected to decrease in 2025. The target remains within Council’s risk appetite of a conservative approach given the types of investments that Council is limited to investing are also conservative and limited.

III. 6.1 Liquidity Framework: To simplify the illustration of the Liquidity Threshold, the amount that the table uses is rounded to $200M.

Furthermore, the Liquidity minimum threshold for ‘1 month (incl. Call Account & General Fund)’ has been amended from ‘10% or $20M (whichever comes first)’ to ‘10% minimum on portfolio balance under $200m and $20m thereafter’. This aims to clarify the intent of the threshold, ensuring sufficient funds are readily available to Council for the 1-month period; but also, not to compromise the opportunity cost of better rates for longer term investments.

IV. Extend the policy review period through ARIC and PRC to four-year interval: It is proposed for the Council’s Investment Policy and Strategy to be annually reviewed within the Finance department, with oversight from Chief Financial Officer and Director Corporate Services. As part of the annual review, should there be a need to make amendments to the policy that are administrative (such as changes to titles to reflect organisational structure change) then a report will be made to the ARIC and PRC. It is to be noted that there have been no changes to the legislation and OLG framework since 2011.

This proposal will remain compliant with the section 1.4 ‘Who should use these investment policy guidelines’ of the Investment Policy Guidelines May 2010, issued by OLG, formerly known as Division of Local Government.

Review of Investment Strategy

I. Investment environment and Removal of COVID-19 related components and/or commentaries: Update the prior year’s paragraph, as it makes reference to COVID-19’s economic impact. The Australian economy and Inflation Rate have started to stabilise - returning to RBA’s target of 2% to 3%, this warranted a new set of commentary that would provide a more relevant economic outlook. With this, it is recommended to include the below, revised paragraph:

In past year, the Reserve Bank of Australia (RBA) kept the official cash rate static, at 4.35%. This is relative to the RBA’s aim in bringing Australia’s inflation rate within the target of 2% to 3%. Inherent to the stabilisation of cash rate, the Council’s end of month’s average rate of return has succeeded in surpassing both benchmarks, being BBSW monthly return and Enhanced BBSW; showing the impact of the continued improvements in interest rates being invested. The Council will remain proactive in securing the best interest rates on offer at the time the funds are invested. It is worth noting, the big four banks believe the current cycle of interest rate hikes have reached their peak and predicts the RBA might make its first rate cut in the first half of 2025.

II. Commence investing with TCorp’s medium/long-term growth funds: There is no change to the strategy, but this is brought to the PRC’s knowledge for the purpose of transparency and accountability. The current Investment Strategy enables investment of the medium and long term TCorp’s growth funds product (up to 10%). Council has not previously invested in these products, due to the risk of a negative return in any one year. Given the performance of the products over the recent times, it is proposed that Council invest in those products, as allowed by the current version of the strategy. These growth funds are achieving an increase in high returns over the long term due to investments with a mixed portfolio including property and shares. For example, TCorp’s medium and long term growth funds gained 6.4% and 13.2% respectively over the 2024 calendar year with returns of between 5.1% and 7.1% over the previous 3-10 years, (attached is the full TCorp December report for more information). Placements within these funds can be withdrawn at any time without withdrawal fees and are not locked in.

Council has not invested within these funds previously due to the risk of negative returns within some months, however the performance has remained strong over the last few years and with Councils continued high portfolio amount, it is viewed that an amount within the 10% maximum could be placed and ride out any negative monthly returns over the next 7 - 10 years in order to achieve these high annual returns. Any new placement funds and amounts require the Chief Financial Officers approval, and it is proposed that Council will begin investing in TCorp long term growth funds as soon as practicable.

Conclusion

Council Officers have prepared the Annual Review of Council’s Investment Policy and Strategy. This report recommends that Council adopt the proposed changes to the Investment Policy and Strategy as outlined in this report including extending out reporting of the policy review period to 4 years. Should further amendments to the policy require approval within the review period, the proposed policy amendments will be reported to the ARIC and Policy Review Committee.

RECOMMENDATION

That:

1. The information contained in the report on Annual Review of Council's Investment Policy and Strategy be received

2. Council adopts the proposed changes to the Annual Review of Council's Investment Policy tabled in this report.

ATTACHMENTS/APPENDICES

1. ⇩	2024-25 Investment Policy	9 Pages	Attachments Included
2. ⇩	2024-25 Investment Policy Attachments	12 Pages	Attachments Included
3. ⇩	2024-25 Investment Strategy	4 Pages	Attachments Included